Wednesday, June 27, 2012

Nappier Harpoons Malloy

State Treasurer Denise Nappier points out in a letter to the Journal Inquirerimportant differences between her view on expanded bonding authority and that of Governor Dannel Malloy.

In the course of her letter, Ms. Nappier shoves a boney finger in the governor’s chest and warns, “… when legislation is enacted that will result in unnecessary additional costs of issuing state bonds, and may jeopardize investor confidence in our bonds, it is my duty as state treasurer to speak out against the measure and urge corrective action."

Mr. Malloy wants expanded bonding authority for the Connecticut Health and Educational Facilities Authority. Ms. Nappier wrote that she had always supported the consolidation of two quasi-public authorities, the CHEFA and the Connecticut Higher Education Supplemental Loan Authority, and she heartily agreed with the governor that the consolidation would enhance efficiency. “However,” she writes, “CHEFA’s new authority to issue bonds for UConn is unnecessary, costly, and may confuse investors and undermine their confidence in existing UConn 2000 bonds.”

Apparently, Ms. Nappier had shared her misgivings with Mr. Malloy to no avail.

The new bill just signed into law establishing a new bonding process is, Ms. Nappier stresses, “duplicative of what has been in place for 17 years, and that will surely cost taxpayers much more than what the treasury, as the public financing arm of the state, has provided. Higher costs would result from CHEFA’s administrative fees, as well as likely higher interest costs. Based on comparisons we have done, this new duplicate process could result in additional expenses of more than $8 million on a typical $200 million financing.”

The original UConn 2000 program, Ms. Nappier notes, as initially proposed was a 10-year, $1.25 billion venture. However, the program had been extended a few times, ballooning the cost to $2.5 billion over 23 years. Partnering with the university, Ms. Nappier’s office has issued almost $1.9 billion in new money bonds to sustain the program.

“This begs the question: Why did the treasury’s attempt to call attention to another ill-advised and poorly crafted provision to grant CHEFA new authority to see UConn bonds fall on deaf ears?

“Simply put, when legislation is enacted that will result in unnecessary additional costs of issuing state bonds, and may jeopardize investor confidence in our bonds, it is my duty as state treasurer to speak out against the measure and urge corrective action.”

Ms. Nappier had advised Mr. Malloy of the legislation’s shortcomings, which he and legislative gate keepers in the General Assembly chose to ignore.

In her letter, Ms. Nappier washes her hands of the predictable consequences: “That the governor chose to ignore my advice will be at his doorstep.”

Republicans are somewhat astonished – though delighted -- by Ms. Nappier’s very public quarrel with Mr. Malloy. Republicans, shooed unceremoniously out of the room when the governor’s office was hammering out its budget with Democratic Party leaders and union officials, have yet to suggest that the governor had loftily ignored the treasurer’s seemingly sound advice because he may have thought she was a Republican.